Italy PM takes growth message to Berlin

Tuesday, April 30, 2013 - 01:53

April 30 - New Italian Prime Minister Enrico Letta made the first stop of a brief European tour in Berlin for talks with Chancellor Merkel. He's promised to press for a change to the EU's focus on austerity and pursue economic growth and jobs. Joanne Nicholson reports on the reception he is likely to get in Europe.

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Fresh from winning confidence votes in the upper and lower houses of parliament, Italy's new Prime Minister headed to Berlin for the first stop on a brief European tour.
Letta's message is growth, not austerity
But German Chancellor Angela Merkel has held firm throughout the financial crisis, that austerity is the right path.
SOUNDBITE (Italian) ENRICO LETTA, ITALIAN PRIME MINISTER, SAYING:
"The only big goal is to understand that the large crisis which has been taking place for the past five years, has not found a sufficient solution because it has not been dealt with sufficiently in Europe. This is the biggest goal for my government."
Unemployment is at 20-year high in Italy and the recession, the longest since World War Two, looks as though it will drag on all year.
And that's why Letta needs to try something different. Paul Kavanagh is a market strategist at Killik and Co.
SOUNDBITE (English) PAUL KAVANAGH, SENIOR MARKET STRATEGIST, KILLIK & CO, SAYING:
"My betting is we'll be back at this table in three or four years, wondering why it never worked, why we're not getting the level of growth we expected having given the stimulus out, but it is par for the course of what we would expect from Europe at the moment. It is the easy option politically."
Letta's leadership is not expected to be plain sailing.
Four-times Prime Minister Silvio Berlusconi threatened to pull his centre-right People of Freedom party out of the coalition if it does not abolish an unpopular housing tax.
Letta says he'll suspend the levy but has not said he'd scrap it altogether.
He's proposed freezing a planned increase in sales tax.
Those two measures alone will cost about 4 billion euros in lost revenue this year.
And, Italy's biggest labour unions say they would hold a protest in June to push for more job creation policies.
Letta travels to Paris on Wednesday where he is likely to find an ally in French President Francois Hollande.

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